There are many open questions about the Excise Tax, which will need to be answered by regulations. The interpretation on which this calculator is based represents our current understanding of the statutory language in the absence of regulatory guidance. Other interpretations may be equally valid. In other words, the calculator is not meant to provide all of the information an employer will need to comply with the Excise Tax. To learn more about the Excise Tax, click here.
- Background information about the Excise Tax
Beginning in 2018, a 40% non-deductible excise tax will be imposed on insurers/administrators of employer-sponsored health plans with aggregate values that exceed specified thresholds. The expectation is that those costs will be passed back to the plan sponsor. Regardless of whether an employer will redesign its plans to fall below the thresholds or plan to simply absorb any cost increase as a result of the tax, the calculator provides a practical starting point for employers to assess how their current plans may be impacted by the Excise Tax.
Because the thresholds are 2018 figures, comparing the current plan premiums to the thresholds does not provide an accurate result. In order the estimate the impact of the Excise Tax, the employer must first project how inflation will impact current plan premiums – both before and after 2018.
Advantages of Partnering with American Fidelity
Reducing the cost of your plan would also reduce the impact of the Excise Tax. Click here for some cost management strategies or learn how American Fidelity's services and products can help you save.
American Fidelity Assurance Company does not provide tax or legal advice.